Report Sheds Light on Scale and Complexity of Online Piracy and Counterfeiting Problem

MarkMonitor study shows digital piracy and counterfeit goods websites generate more than 53 billion visits per year

LONDON, 12 January 2011 – A sampling of only 22 brands revealed that websites offering pirated digital content and counterfeit goods generate more than 53 billion visits per year, according to a study released today by MarkMonitor®, the global leader in enterprise brand protection. Sites offering pirated digital content draw the lion’s share of the 53 billion annual visits while sites selling counterfeit goods, including prescription drugs and luxury goods, generate more than 92 million visits per year. The amount of traffic generated by these sites as well as the range of locations used to host and register them indicates the complexity in finding a solution to the global problem of online piracy and counterfeiting.

Global piracy affects a wide range of digital content, including movies, music, games, software, television shows and e-books while the trade in counterfeit goods online touches almost every item, including clothing, footwear, electronics, luxury items, sports merchandise and pharmaceuticals. MarkMonitor estimates the worldwide economic impact of online piracy and counterfeiting at $200 billion annually.

U.S. businesses are increasingly aware of the damage digital piracy and online counterfeiting can do to their brands, which prompted the U.S. Chamber of Commerce to approach MarkMonitor about developing a fresh perspective on the scope of the problem. As a result of these discussions, MarkMonitor produced an independent study of online traffic trends to rogue sites, identifying and prioritising some of the worst offenders based on traffic, as well as identifying location information.

“In the online world, unlike the physical world, supply and demand are virtually limitless so it is imperative to understand both online distribution channels as well as digital promotional vehicles in order to develop effective mitigation strategies,” said Frederick Felman, CMO of MarkMonitor. “Examining traffic patterns and geographic information are vital in identifying and prioritising enforcement actions rather than playing ‘whack-a-mole’ with egregious offenders.”

Among the study’s findings were that 67 percent of sites suspected of hosting pirated content and 73 percent of sites categorised as “counterfeit” were hosted in North America or Western Europe. In previous ‘test buys’ of prescription pharmaceutical products from some of these sites, MarkMonitor found that payment processing and order fulfillment took place in countries other than that used to host the site or register its domain name. These findings demonstrate that while reliable infrastructure is a key factor for sites hosting piracy and counterfeit goods, many of these sites conduct business across multiple national boundaries.

“The global epidemic of counterfeiting and piracy has a huge impact on national economies,” said Ruth Orchard, Director General, Anti Counterfeiting Group. “For example, in the UK clothing and footwear sector alone, £3.5 billion each year goes straight into the pockets of the serious organised criminals who control the trade in fakes. And consumers after a bargain online are increasingly at risk from fake websites and other illegal practices, as highlighted by the findings of the MarkMonitor survey. Urgent action is needed by governments and law enforcement around the world, in collaboration with business, to protect both consumers and genuine brands against this unprecedented threat.”

MarkMonitor conducted the study during 2010 using a sample of 22 brands from product categories including prescription drugs, luxury goods, music, films and athletic gear. Using its patented technology, the company ran automated scans which identified more than 10,000 suspicious sites that were filtered further to include only dedicated e-commerce and digital content delivery sites which were then ranked by traffic using publicly-available Alexa data. MarkMonitor experts examined the resulting data set to determine whether sites met strict criteria for pirated digital content or sales of counterfeit goods.

Because of the small sample of brands used in the study, it provides a snapshot of the scope of online theft of intellectual property and illicit e-commerce. Given the large number of popular brands, it is reasonable to assume that hundreds of thousands of other rights-holders, brands and content creators are suffering the same damage.

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